Downpayment or Loan-to-Value (LTV) discount - For loans with collateral, we offer discounts when the loan amount is fair relative to the value of the collateral. The way this works is in 2 different ways.
- For auto purchases from a dealer - we use downpayment as the metric to determine discounts as follows:
- If downpayment > 10% = (-1%) discount
- If downpayment > 20% = (-2%) discount
- For auto refinance or private-party purchases - we use loan-to-value (LTV) as the metric to determine discounts as follows:
- If LTV < 90% = (-1%) discount
- If LTV < 80% = (-2%) discount
However, it's essential to understand that the pre-approval offer only shows the approved interest rate, which considers discounts for recent arrivals and good credit. However, it does not include discounts on the down payment or loan-to-value ratio (LTV). The final interest rate, which considers the down payment and LTV ratio, will only be determined once we receive the bill of sale for the specific car you want to buy. Your loan contract will state This final interest rate at the time of closing.
For instance, a customer is offered pre-approval with an interest rate of 10.99% that is already discounted by 1% for having a good credit score. However, if the customer makes a down payment of $4,000 (20% of the $20,000 auto loan mentioned in the Bill of Sale), an extra discount of 2% would be applied. Consequently, the loan contract would show a final interest rate of 7.99%.
Please inform the dealer if you plan to make a down payment on your car purchase. The down payment amount should be clearly stated on the bill of sale. The down payment is calculated based on a percentage of the vehicle sale price, excluding taxes and dealer fees. The loan-to-value percentage (LTV%) is used instead of a down payment for private-party purchases and Auto Refinance Loans.
Please visit the information articles for Auto Purchase Loans and Auto Refinance Loans to learn more about the current loan rates and terms.
Comments
0 comments
Article is closed for comments.